Bounce From The Brink
Revenue worries about IBM
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the Dow plunging 435 points or 4.6% within the first 15 minutes of trading
Wednesday, as the average crossed below the psychological 10,000 level for the
first time since March 15. The Dow battled back throughout the session to close
with just a 1.1% loss.
The Nasdaq and S&P 500 also opened sharply to the downside before a rally
in the semiconductors helped spark a broader market rise that ended with the
Nasdaq down just 1.3% and the S&P 500 down just 0.6%.
Consumer Price Index numbers came in slightly higher then expected, and that
conjured up more concerns about inflationary pressures. The CPI increased 0.5%
and the core rate increased 0.3%, and each figure was 0.1% more than analysts
had expected.
Nasdaq volume surged more than 25% from Tuesday’s level, as 2.5 billion
shares changed hands, while NYSE volume also spiked 23%, with 1.43 billion
shares trading.
Analysts felt that the day’s action may have represented the proverbial
washout, although most remained wary since there are many potentially
disappointing earnings announcements coming out in the next week or so.
“This is a very dark moment for the market in terms of investor
psychology and the overall news environment, which typically coincides with a
capitulation, which is a word that many are using right now,” said Joe Battipaglia,
Chief Investment Strategist, Gruntal & Co.
“We had a nice recovery from the day’s lows, and I think that the
fundamental environment is going to provide an atmosphere of improving stock
prices well into the new year,” he added.
According to preliminary numbers, the Dow fell 114.69 to 9975.02, the Nasdaq
slid 42.56 to 3171.40, and the S&P 500 eased 7.86 to 1342.11.
Top sectors included forest and paper products
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retailers
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Under pressure were transportation
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down 2.0%, and broker/dealers
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Beleaguered techs bouncing back included WorldCom
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After the bell, Microsoft
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earnings, and that has lifted Microsoft in after-hours trading. After closing up
1 5/16 to 51 3/4, the software giant and alleged monopolist is trading up to 53
1/2 after the close.
Looking ahead, the October Philadelphia Fed Survey is due out at 10:00 AM ET,
and consensus estimates look for a figure of 5.0. Also due out is the trade gap,
which will be released at 8:30 AM ET. Analysts look for a $32 billion deficit.